A Tax Bill Before the Holiday

The Weekly  Update

Week of December 25, 2017
By Christopher T. Much, CFP®, AIF®

As we headed into the long holiday weekend, the markets continued to climb as tax reform moved forward. For the week, the S&P 500 closed up 0.29%, the Dow rose 0.43%, and the NASDAQ gained 0.35%. International stocks in the MSCI EAFE increased by 1.23%.

Before leaving for his holiday vacation, President Trump signed a new tax bill and a measure to temporarily delay a possible government shutdown. Supporters of the $1.5 trillion tax cut, which dramatically reduces the corporate tax rate, believe it will encourage businesses to invest, hire more workers, and increase wages. Some companies are already celebrating by offering bonuses to their employees and promising to improve infrastructure in the workplace.

Tax Bill Highlights

The historic bill is the largest tax revamp in more than 30 years and makes several changes to the federal tax system, including:

  • Lowers corporate tax rate from 35% to 21%
  • Offers pass-through businesses a 20% tax deduction
  • Cuts top individual tax rate
  • Increases standard deduction and child tax credit
  • Limits state and local tax deductions

Other Economic News

Though popular cryptocurrencies experienced volatility, strong economic news helped round out the week on a positive note.

Housing Picks Up: Home sales rose in November, with new home sales recording the largest jump in 25 years. Existing home sales also beat analyst forecasts and jumped to the highest rates seen during the economic expansion. The housing numbers mirror the solid, year-long market performance.

GDP Grows: We received the final reading of 3rd quarter Gross Domestic Product, which showed the economy grew 3.2% between July and September. Data suggests—thanks to a strong housing market—that 4th quarter GDP should rise by 3% as well.

What’s Ahead

With consumer confidence at a 17-year high, investors remain hopeful that the markets will ring in the New Year in good shape. We will see more housing news along with an update on current consumer confidence.

Over the holidays, we’ll keep tabs on the markets and look toward economic developments in 2018. As always, please contact us if you have any questions.

ECONOMIC CALENDAR
Monday: Markets Closed for Christmas Day
Wednesday: S&P CoreLogic Case-Shiller Home Price Index, Consumer Confidence, Pending Home Sales Index
Thursday: Jobless Claims

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.cnbc.com/2017/12/22/us-stocks-congress-shutdown-trump-tax-bill.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/12/22/trump-signs-gop-tax-plan-short-term-government-funding-bill.html
https://www.bloomberg.com/news/articles/2017-12-22/trump-signs-1-5-trillion-tax-cut-in-first-major-legislative-win
https://www.cnbc.com/2017/12/19/us-congress-poised-to-approve-biggest-tax-overhaul-in-30-years.html
https://www.bloomberg.com/news/articles/2017-12-22/trump-signs-1-5-trillion-tax-cut-in-first-major-legislative-win
https://www.bloomberg.com/news/articles/2017-12-22/wealthy-americans-are-already-trying-to-exploit-the-new-tax-law
https://www.bloomberg.com/news/articles/2017-12-23/bitcoin-climbs-finding-floor-after-worst-selloff-since-2015
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=487763&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=487763&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=487763&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
A Tax Bill Before the Holiday2017-12-26T13:30:11-04:00

Happy Holidays Video

Happy Holidays from your friends at CTS Financial Group

Life is not measured by the breaths we take, but by the moments that take our breath away (Vicki Corona). Wishing you a holiday season filled with treasured moments.

Enjoy our new holiday video http://bit.ly/2jUjB5y

Happy Holidays Video2017-12-19T11:19:11-04:00

Tax Plan Boosts Stocks

The Weekly Update

Week of December 18, 2017
By Christopher T. Much, CFP®, AIF®

Domestic markets were up last week as tax reform became more likely. On Friday, several previously undecided Senators announced they would back the combined House and Senate bill, and stocks reacted by hitting new record highs. For the week, the S&P 500 gained 0.92%, the Dow added 1.33%, and the NASDAQ grew by 1.41%. International stocks in the MSCI EAFE increased 0.13%.

The House and Senate may vote on the tax plan this week, and if it passes, many changes will be on the horizon, including the corporate tax rate dropping from 35% to 21% in 2018. Anticipation of this change has contributed to the many record highs we’ve seen in the domestic markets this year.

However, while tax reform was a major topic last week, we also received a number of other economic updates. Two key events are worth noting: increasing interest rates and soaring retail sales.

  • The Federal Reserve Raised Rates
    The Fed increased the benchmark interest rate for the third time this year, raising it a quarter percent to be between 1.25% and 1.5%. Credit cards, home equity lines of credit, and adjustable-rate mortgages could all become more expensive as a result of the latest increase.
  • Retail Sales Soared
    Consumer spending was far higher than expected in November, growing 0.8% over the previous month’s numbers. This increase could contribute to strong economic growth in the fourth quarter.

Together, this week’s market performance and economic updates may paint a picture of a healthy end to a year of significant growth. We will continue to monitor both geopolitical developments and economic data as they emerge. We look forward to seeing what is on the horizon for the rest of 2017—and for the year ahead. As always, if you have any questions, we’re here to talk.

ECONOMIC CALENDAR
Monday: Housing Market Index
Tuesday: Housing Starts
Wednesday: Existing Home Sales
Thursday: GDP, Jobless Claims
Friday: Durable Goods Orders, New Home Sales, Consumer Sentiment

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.cnbc.com/2017/12/15/us-stocks-tax-bill-congress.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/12/15/us-stocks-tax-bill-congress.html
https://www.usatoday.com/story/money/2017/12/13/how-fed-interest-rate-hike-could-affect-your-wallet/945792001/
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477718&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
Tax Plan Boosts Stocks2017-12-18T13:11:46-04:00

Strong Markets for the Holidays

The Weekly Update

Week of December 11, 2017
By Christopher T. Much, CFP®, AIF®

As the holiday season progresses, the markets continue to impress. Last week, many energy, financial, and industrial sector stocks helped drive performance. Hitting record highs yet again, the S&P gained 0.35%, and the Dow jumped 0.40% for the week. Meanwhile, the NASDAQ fell slightly by 0.11%, and the MSCI EAFE rose 0.08%.

Solid labor market conditions and a rebounding retail climate are helping to support the economy as the year closes. Here are some developments that stood out last week:

Promising Labor Market Numbers

Encouraging news came on Friday when we learned that nonfarm payroll jobs rose more than expected in November, coming in at 228,000. Manufacturers have created almost 200,000 new jobs in the last 12 months and 1 million new factory jobs since 2010. We have now had 86-straight months of job gains, the longest stretch in U.S. history.

This growth in new jobs has helped to keep unemployment down, which remains at a 17-year low of 4.1%. Additionally, average hourly wages have increased by 2.5% for the year.

Retail Climate in Positive Territory

As the job market expands and people have more spending power, we’re experiencing a robust retail climate. Retail stocks are rebounding after a long market lag, and holiday shopping is strong this season with predicted growth from 3.6% to 4% over last year. Further, brick-and-mortar shops are even feeling the shopping strength, emerging as some of the best performing retail investments, despite their general drop in 2017.

What Lies Ahead

Now that Congress has avoided a government shutdown—at least for a few weeks—the Senate and the House can focus on the tax bill. While progress has been made, they still need to negotiate the financial bill’s terms.

Next week, investors will follow the Fed to see if it raises interest rates, as expected. In addition, the Fed could also comment on inflation expectations and address concerns about potential asset bubbles.

As the holidays wind up, we will continue to monitor the markets and focus on the fundamentals. If you have questions about how this news affects your financial life, we’re here to talk. Feel free to contact us and find the answers you need.

ECONOMIC CALENDAR
Monday: JOLTS
Wednesday: Consumer Price Index, FOMC Meeting Announcement
Thursday: Jobless Claims, Retail Sales, Business Inventories
Friday: Empire State Mfg Survey, Industrial Production

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.cnbc.com/2017/12/05/questions-rising-about-limits-of-the-tax-trade.html
https://www.cnbc.com/2017/12/08/us-stocks-jobs-report-brexit-tax-reform.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventfull.asp?fid=477426&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.marketwatch.com/story/american-manufacturers-flex-their-muscles-sales-hiring-production-all-on-upswing-2017-12-08
http://www.foxbusiness.com/markets/2017/12/08/us-economy-adds-more-jobs-in-november-than-expected.html
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.cnbc.com/2017/12/08/us-stocks-jobs-report-brexit-tax-reform.html
https://www.morningstar.com/news/market-watch/TDJNMW_20171207667/update-tax-reform-and-holiday-shopping-send-retail-stocks-to-best-month-in-6-years.html
http://www.businessinsider.com/government-shutdown-house-vote-trump-2017-12
http://www.businessinsider.com/trump-gop-tax-reform-bill-poll-cbs-2017-12
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
Strong Markets for the Holidays2017-12-11T14:42:58-04:00

Looking Beyond Politics

The Weekly Update

Week of December 4, 2017
By Christopher Much, CFP®, AIF®

Markets went for a wild ride last week—especially on Friday. In fact, on December 1, the S&P 500 had its largest fluctuations since the day after the 2016 presidential election.

Nonetheless, two of the major domestic markets hit new record highs on Thursday and ended the week with sizable gains. The S&P 500 added 1.53% and the Dow gained 2.86%. Meanwhile, the NASDAQ lost 0.60% and international stocks in the MSCI EAFE gave back 0.95%.

What drove markets last week?

Politics played a large role in market performance last week with big developments on tax reform and the Russia investigation.

  • Tax Reform
    On Thursday, news that the Senate bill was more likely to pass contributed to the Dow and S&P 500 closing at record highs. Early Saturday morning, the Senate did end up voting in favor of the proposal.
  • Russia Investigation
    On Friday, stocks dropped on news that former National Security Adviser Michael Flynn pleaded guilty to charges of lying to the FBI.

While politics grabbed many of the headlines, we also received economic updates that are worth noting:

  • Gross Domestic Product
    We received the 2nd GDP reading for July – October, and the report came back higher than expected. During the 3rd quarter, the economy grew at 3.3%, which is its quickest pace in 3 years.
  • Housing Sales
    New home sales beat expectations in the most recent report and increased 18.7% year over year. The sales were higher than they’ve been in a decade.
  • Consumer Spending
    Americans spent and earned more money in October, according to the data we received last week.

What should you focus on?
Political developments are affecting daily market performance, so we understand the interest they hold. While you may be following these reports, we also want to ensure you recognize the economic data coming forward, too.

We cannot predict what will happen with tax reform or the Russia investigation. However, we can continue to monitor them while focusing on what’s really happening in the economy beyond the headlines. If you ever have questions about how current events may affect your financial life, please contact us any time.

ECONOMIC CALENDAR
Monday: Factory Orders
Tuesday: ISM Non-Mfg Index
Wednesday: ADP Employment Report
Thursday: Jobless Claims
Friday: Consumer Sentiment

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.cnbc.com/2017/11/24/us-stocks-black-friday-retail-amazon-holidays.html
https://www.cnbc.com/2017/12/01/us-stock-futures-data-opec-tax-on-the-agenda.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
https://www.cnbc.com/2017/12/01/us-stock-futures-data-opec-tax-on-the-agenda.html
https://www.cnbc.com/2017/11/30/us-stocks-dow-record-high-tax-reform-senate.html
http://www.cnn.com/2017/12/01/politics/senate-tax-bill-vote-uncertainty/index.html
https://www.bloomberg.com/news/articles/2017-11-30/asian-stocks-set-to-rebound-after-u-s-advance-markets-wrap
http://www.ftportfolios.com/Commentary/EconomicResearch/2017/11/29/real-gdp-revised-up-to-a-3.3percent-annual-growth-rate-in-q3
http://www.ftportfolios.com/Commentary/EconomicResearch/2017/11/27/new-single-family-home-sales-increased-6.2percent-in-october
http://abcnews.go.com/Business/wireStory/consumer-spending-rose-solid-03-percent-october-51483354
Looking Beyond Politics2017-12-04T14:29:02-04:00